The Urban Fund
The priority for government in urban centres is to support the delivery of high-bandwidth services to businesses, health organisations, tertiary institutions, schools and other public or municipal entities in a manner that supports competition and future investment in fibre, or equivalent high bandwidth technology, to the home. The government has concluded that the most appropriate mechanism to attain this objective is to achieve maximum leverage through the provision of seed funding for the deployment of open access passive infrastructure (ducting and dark fibre) in urban centres and surrounding suburbs. The urban criteria will not preclude applications from entities wishing to also provide services to end-users, but have been designed to attract a wide range of potential investors and to prevent the emergence of vertically integrated monopolies.
The seed funding will be provided as operating grants and the government will not require any financial return on its funding. A minimum co-investment at least equal to the Crown's contribution will be required, but with higher levels of co-investment strongly preferred.
This mechanism will ensure fibre connections are available to high bandwidth users in a given urban location and will also substantially lower the costs for those businesses wishing to access a fibre connection by bringing the fibre much closer to their premises. Building on the government's recent regulatory changes, this mechanism will not only promote competition at the deepest level of the network, but will substantially lower the greatest barrier to investment in fibre to the home: the civil costs associated with digging up the road and laying ducting. As a result of this initiative, all network operators will have the opportunity to utilise the ducting or the dark-fibre as a ‘base component' from which they can provide subsequent connections to end-users (whether fibre, DSL or wireless connections).
Another key aspect of the urban criteria is that there is no requirement for applicants to provide telecommunications services in order to be eligible for funding – something that many investors, lines companies and local councils considering "duct-only" networks are likely to be very interested in examining (such applicants will still need to demonstrate a sustainable business case, which may require partnerships with a range of telecommunications operator).
The government is aware that the broadband landscape is changing constantly, and the draft criteria have been developed with this in mind. They are designed to be flexible enough to allow a wide range of projects to be considered over time. The draft urban criteria are included as Annex Two.
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